Container Shipping Companies Expected to Report Highest Quarterly Profits Since the Pandemic

Asian shipping company disclosures indicate that US-listed Zim’s Q3 2024 performance forecast may be too low.

October 9, 2024
Analysis

Due to the ongoing Red Sea crisis and the advance scheduling of freight before potential US port strikes, listed liner companies will report their best quarterly performance in two years. However, Q3 2024 may be the peak for this cycle, with future performances expected to decline.

Two important conclusions can be drawn from Asian shipping company financial disclosures: Q3 will be significantly better than Q2 – it will be the best reporting period since the pandemic boom – and Q3 2024 might be the zenith of the current cycle as performance at the end of the quarter is much weaker compared to its beginning.

The monthly operating revenues of Taiwan-listed shipping companies have been disclosed. Evergreen Marine and Yang Ming reported their September revenues on Tuesday and Wednesday, respectively.

Evergreen Marine’s revenue for Q3 2024 increased by 44% quarter-over-quarter (QoQ) to NT$152.8 billion (approximately USD 4.7 billion), marking the highest quarterly figure since the supply chain crisis in Q3 2022.

Other Taiwanese shipping companies have shown similar performance: Yang Ming’s revenue for Q3 2024 grew by 39% QoQ, reaching its highest level since Q3 2022. Wan Hai Lines’ revenue increased by 43%, also hitting the highest level since Q3 2022.

Jefferies analyst Omar Nokta highlighted what Taiwan shipping company disclosures might mean for US-listed Zim.

“Given their relatively high exposure to spot markets, Zim’s revenue changes typically follow those of Taiwanese shipping companies,” he wrote in a client report.

“Zim generated USD 1.93 billion in revenue in Q2 2024, with consensus estimates for Q3 at USD 2.31 billion, representing a year-over-year (YoY) increase of 20%. Assuming a similar leap as Evergreen’s 44%, Zim’s revenue would approach USD 2.78 billion, exceeding the consensus estimate by about USD 470 million or approximately USD 3.90 per share.”

Declining Revenues with Progressing Quarters

The good news is that the bad news is that Taiwan shipping companies’ monthly revenues in September were significantly lower than those in July.

The decline in spot rates since early July has negatively impacted shipping company revenues, and this downward trend is expected to continue into Q4 as spot rates are projected to fall further.

Evergreen Marine’s revenue for September was 18% lower compared to July. Yang Ming saw a similar decrease of 15%. Wan Hai Lines experienced the largest drop at 26%.

FEU Revenue Data Highlights Trans-Pacific Strength

Hong Kong-listed OOIL disclosed additional information about liner performance for Q3 2024 on Monday.

Taiwan shipping companies’ revenue data is influenced by changes in fleet size, including new vessel deliveries. OOIL provides a purer standard: it segments revenues and volumes by trade lanes, allowing the calculation of FEU revenue per geographic market.

Similar to Taiwan shipping company data, OOIL’s figures suggest that continuous revenue growth consensus for Zim is too low.

OOIL reported an average revenue per TEU of USD 3,162 globally in Q3 2024, a 31% increase quarter-over-quarter. This marks the highest quarterly average since Q4 2022 and is twice OOIL’s pre-pandemic average revenue per FEU in Q3 2019.

The Trans-Pacific route was OOIL’s standout performance for Q3 2024, with an average revenue of USD 4,546 per FEU, a 29% increase quarter-over-quarter. This is the highest quarterly average since Q4 2022 for OOIL’s Trans-Pacific trade.

For Zim, which relies heavily on the Trans-Pacific route, this result is very positive.

OOIL’s Asia-Europe lane saw a significant surge in revenue per FEU of 51% quarter-over-quarter to USD 4,481. Volumes remained stable (down by only 1%), with sequential growth driven by strong freight rates. The quarterly average for the Asia-Europe route is the highest since Q3 2022.

OOIL’s revenue per FEU on the Trans-Atlantic route saw minimal change, increasing by just 2% to USD 2,577; while in intra-Asia trade, the average revenue per FEU was USD 1,909, a 26% increase quarter-over-quarter.

Source: Lloyd’s List